United States District Court, W.D. Virginia, Abingdon Division
January 3, 2017
WEYERHAEUSER COMPANY, ET AL., ETC., Plaintiffs,
YELLOW POPLAR LUMBER COMPANY, INC., ET AL., Defendants.
W. Massie and Seth M. Land, Penn Stuart & Eskridge,
Abingdon, Virginia, for Range Resources-Pine Mountain, Inc.,
Range Resources-Appalachia, LLC, EQT Production Company, and
EQT Production Nora, LLC; and Jennifer Shaver Friedel, Shaver
Law Office, PLLC, Blacksburg, Virginia, for John J. Horschel,
Henry T. “Hank” Horschel, William B. Douglas,
Jr., Albert G. Friend, James F. Friend, and Jon Friend.
OPINION AND ORDER
P. Jones, United States District Judge
case involves a dispute over ownership of the gas estate on
land located in Virginia. The principal parties previously
moved for summary judgment, which I denied as to all parties,
and the case is set to proceed to trial. Defendants Range
Resources-Pine Mountain, Inc., Range Resources-Appalachia,
LLC, EQT Production Company, and EQT Production Nora, LLC
(collectively “Range/EQT”) have now moved to
dismiss the crossclaim asserted by defendants John H.
Horschel, Henry T. “Hank” Horschel, William B.
Douglas, Jr., Albert G. Friend, James F. Friend, and Jon P.
Friend (collectively “Horschels/Friends”).
thoroughly reviewed the procedural history and facts of this
case in my previous opinion denying summary judgment as to
all parties and will not repeat them here. Op. & Order
4-11, ECF No. 428. However, since I issued my opinion denying
summary judgment, certain events have occurred that warrant
time I denied summary judgment, John M. Lamie was serving
both as bankruptcy trustee for Yellow Poplar Lumber Company
(“Trustee”) and as counsel for Horschels/Friends.
A few days after I issued my opinion, the
plaintiffs sought to have Mr. Lamie removed as
Trustee due to an alleged conflict of interest. Mot. to
Appoint Substitute Bankruptcy Trustee, ECF No. 429. In
response, Mr. Lamie moved to withdraw as counsel for
Horschels/Friends. Mot. to Withdraw as Counsel, ECF No. 437.
I granted this motion and substituted Jennifer Shaver Friedel
(formerly Jennifer L. Shaver) as counsel for
Horschels/Friends. Order, ECF No. 443. Mr. Lamie continued to
represent the interests of Yellow Poplar as Trustee.
week later, defendants Range/EQT moved to dismiss the
crossclaim of Horschels/Friends for lack of standing. This
motion has been briefed by Range/EQT and Horschels/Friends
and is ripe for decision.
bankruptcy trustee “has capacity to sue and be
sued” on behalf of the estate. 11 U.S.C. § 323(b).
This standing to sue is exclusive to the trustee: “[i]f
a cause of action is part of the estate of the bankrupt then
the trustee alone has standing to bring that claim.”
Nat'l Am. Ins. Co. v. Ruppert Landscaping Co.,
187 F.3d 439, 441 (4th Cir. 1999); see also
Steyr-Daimler-Puch of Am. Corp. v. Pappas, 852 F.2d 132,
136 (4th Cir. 1988) (holding that when a “claim is
property of the estate, the trustee is given full authority
over it”). A bankruptcy estate includes “all
legal or equitable interests of the debtor in property as of
the commencement of the [bankruptcy] case.” 11 U.S.C.
§ 541(a)(1). A cause of action seeking a declaration of
ownership of property - such as the one raised here by the
Trustee and Horschels/Friends - is therefore part of the
estate if the estate possessed an interest in the property
when the bankruptcy proceeding began. See Vieira v.
Anderson (In re Beach First Nat'l Bancshares, Inc.),
702 F.3d 772, 776 (4th Cir. 2012) (noting that “[a]
debtor's right to bring a legal claim is part of the
bankruptcy estate under . . . § 541(a)”).
have moved to dismiss the claim of Horschels/Friends based on
this principle of trustee-exclusive standing. They state that
“[t]he Trustee and the Horschels/Friends have asserted
identical claims” and argue that because these claims
properly “belong to the bankruptcy estate, ”
Horschels/Friends lack standing to assert them. Mem. Supp.
Mot. to Dismiss 3-4, ECF No. 450. As a result, they say, the
claims of Horschels/Friends should be dismissed for lack of
subject matter jurisdiction.
response, Horschels/Friends argue that they “have a
significant interest in this matter, and are appropriate
intervenors under the law.” Mem. Opp'n Mot. to
Dismiss 2, ECF No. 453. They note that they are not
attempting to preempt the claim asserted by the Trustee and
argue that dismissing their claim “will have the
untenable effect of denying [them] the opportunity to pursue
their claims” and will allow Range/EQT to “escape
liability to Yellow Poplar.” Id. at 3. They
also protest that if they are dismissed from the action and
the Trustee is unsuccessful, their claim will be lost.
with Range/EQT that Horschels/Friends lack standing to pursue
their crossclaim. The claim raised by Horschels/Friends is
identical to that raised by the Trustee. Both parties seek
declarations that they own the gas interest on the relevant
property and that they are entitled to money damages. Because
they allege that this interest was owned by Yellow Poplar at
the time it entered bankruptcy, this claim is part of the
bankruptcy estate. Neither the crossclaimants nor Range/EQT
have suggested otherwise.
clear that the Trustee has standing to assert these claims of
the estate. See 11 U.S.C. § 323. The question
is whether this standing is exclusive to the Trustee or
whether Horschels/Friends, as successors in interest to
Yellow Poplar's shareholders or creditors, have such
standing as well. Yellow Poplar's bankruptcy occurred
under Chapter 11. The Fourth Circuit has not directly
addressed this question of standing in the context of a
Chapter 11 bankruptcy, but its decisions in the contexts of
Chapter 7 bankruptcies are instructive.
Steyr-Daimler-Puch of America, the court held that a
Chapter 7 creditor could not bring claims on behalf of the
estate because the trustee alone had “full
authority” over such claims. 852 F.2d at 136.
Subsequently, in National American Insurance Company
- another Chapter 7 case - the court reiterated that
“the trustee alone has standing to bring [a]
claim” and held that the debtor's sureties
therefore lacked such standing. 187 F.3d at 441. Because
“the trustee's role is to bring suits . . . on
behalf of all the creditors, ” the court
concluded, the sureties' interests were adequately
represented by the Trustee. Id. (emphasis added).
The reason for this trustee-exclusive standing is efficiency:
“the trustee's single effort eliminates the many
wasteful and competitive suits of individual
creditors.” Id. at 441-42 (citation omitted).
More recently, in Poth v. Russey, the court
reiterated that “[c]reditors . . . lack standing to
bring ‘causes of action [that] are . . . similar in
object and purpose to claims that the trustee could bring in
bankruptcy.'” 99 F. App'x 446, 457 (4th Cir.
2004) (unpublished) (quoting Nat'l Am. Ins. Co.,
187 F.3d at 441).
protest that dismissing their claim for lack of standing
would allow Range/EQT to “escape liability to Yellow
Poplar for their wrongful actions.” Mem. Opp'n Mot.
to Dismiss 3, ECF No. 453. I disagree. The interests of the
Trustee and Horschels/Friends in this case are aligned. They
claim ownership of the same property and entitlement to the
same asserts. The causes of action brought by
Horschels/Friends are not merely “similar in object and
purpose” to the causes of action brought by the
Trustee, but are literally identical. If Range/EQT engaged in
conduct that harmed Horschels/Friends, that conduct
necessarily also harmed Yellow Poplar's estate, and it is
for the Trustee to prosecute that claim. Horschels/Friends do
not have standing to pursue their claim here.
Horschels/Friends' argument that dismissing their
crossclaim in this case would “deny[ ] [them] the
opportunity to pursue their claims” altogether,
id., is simply untrue. Should the Trustee prevail in
this case, the assets awarded to the estate will be handled
in the context of the bankruptcy proceeding. As parties in
interest to Yellow Poplar's bankruptcy, Horschels/Friends
will certainly have the right to raise their claims in that
proceeding. See 11 U.S.C. § 1109(b). Until that
time, however, the Trustee has “full authority over
[the claim].” Steyr-Daimler-Puch of Am. Corp.,
852 F.2d at 136.
reasons stated, I find that Horschels/Friends lack standing
to pursue their crossclaim and that Range/EQT's Motion to
Dismiss must therefore be granted.
accordingly ORDERED that Range/EQT's Motion to Dismiss
(ECF No. 449) is GRANTED and Horschel/Friends' Crossclaim
Against Range Resources-Pine Mountain, Inc. (ECF No. 384) is
DISMISSED WITHOUT PREJUDICE.
 The plaintiffs in this case were
formerly Plum Creek Timberlands, L.P. and Highland Resources,
Inc. Upon notice that Plum Creek merged with Weyerhaeuser
Company, with Weyerhaeuser Company as the surviving entity,
and that Highland Resources would soon merge with
Weyerhaeuser NR Company, with Weyerhaeuser NR Company as the
surviving entity, I entered an order substituting parties.
Order, ECF No. 451.
 Mr. Lamie stated that, although no
conflict of interest existed, he would withdraw in order to
avoid the appearance of any conflict.
 I will dispense with oral argument
because the facts and legal contentions are adequately
presented in the materials before the court and argument
would not significantly aid the decisional process.
 Most recently, the Fourth Circuit
found that Chapter 13 debtors possess standing,
“concurrent with that of the trustee . . . to maintain
a non-bankruptcy cause of action on behalf of the
estate.” Wilson v. Dollar Gen. Corp., 717 F.3d
337, 342-43 (4th Cir. 2013). However, it explicitly based
this holding on the unique position enjoyed by Chapter 13
debtors, and it noted that the principle of trustee-exclusive
standing still applies to “causes of action . . .
brought by creditors and by Chapter 7 debtors.”
Id. (citing cases). Because Wilson's
exception was specifically limited to Chapter 13 debtors, and
Horschels/Friends are Chapter 11 creditors, the
Wilson exception does not apply here.
 I note that Horschels/Friends
would have standing to assert these claims if the
Trustee had abandoned them. Steyr-Daimler-Puch of
Am., 852 F.2d at 136 (holding that a creditor can pursue
a claim if there has been “a judicial determination
that the trustee in bankruptcy has abandoned the
claim”). However, given that the Trustee in this case
has joined the crossclaim asserted by Horschels/Friends,
there clearly has been no such abandonment here.
 Range/EQT assert that if
Horschels/Friends lack standing to assert their crossclaim,
this court necessarily lacks subject matter jurisdiction over
it. Mem. Supp. Mot. to Dismiss 3, ECF No. 450. However, it is
not clear whether Horschels/Friends' lack of standing in
this case is a matter of prudential standing or statutory
standing. Dismissal for lack of prudential standing is based
on a lack of subject matter jurisdiction, whereas dismissal
for lack of statutory standing is more properly based on a
failure to state a claim under Federal Rule of Civil
Procedure 12(b)(6). CGM, LLC v. BellSouth Telecomm.,
Inc., 664 F.3d 46, 52-53 (4th Cir. 2011).
The difference between prudential and statutory
standing can be procedurally dispositive. See, e.g.,
Gribben v. United States (In re Gribben), 158 B.R.
920, 922 (S.D.N.Y. 1993) (noting that because the
Government's “argument about statutory standing . .
. does not go to the court's constitutional jurisdiction
over the case, . . . it [was] waived . . . by the
Government's failure to raise it in the proceedings
below”). While an objection to prudential standing, and
thus to subject matter jurisdiction, may be made at any time,
an objection to statutory standing, construed as a motion to
dismiss for failure to state a claim, may be made only in
accordance with Federal Rule of Civil Procedure 12(h)(2). If
the issue in this case is one of statutory standing - a
question I decline to decide here - it is possible that I
would deny Range/EQT's motion on procedural
However, Horschels/Friends have neither raised this
issue nor argued for denial of the motion on procedural
grounds. Furthermore, if I did deny this motion on procedural
grounds, Range/EQT could properly raise this issue in
accordance with Rule 12(h)(2)(C). Because the law is
otherwise clear, and because to deny this motion solely on
procedural grounds would be an inefficient use of time in
this already-lengthy case, I will grant the motion without
deciding whether the standing at issue here is prudential or